Garuda, Boeing sign $1.6b deal for 23 jetliners

JAKARTA (JP): Flag carrier Garuda Indonesia changed its 1990 jetliner procurement contract by signing a US$1.6 billion order for 23 Boeing jets yesterday.

Garuda's president, Soepandi, said the order includes six long-range B-777-200s and 17 regional B-737-300s and B-737-500s.

"The B-737s will be delivered between 1997 and 1999, and the 777s between 2000 and 2002. We will use the jets under lease- operating plans with a third party," he announced at the Indonesia air show.

State-owned Garuda originally ordered nine B-747-400s and 16 B-737-400s in 1990/1991. Of the total order, the company has received three B-747s and seven 737s.

After a series of negotiations, Boeing and Garuda agreed to amend the original order for one B-747-400 into five B-737-500s, and the five B-747-400s into six B-777-200s.

The remaining portion of the original order of nine B-737-400s has been changed into 12 B-737-300s.

Soepandi said adjustments are normal practice in the aviation industry.

Financially-strapped Garuda was assisted by the government's decision to take over US$700 million of its debts. The move was part of a restructuring program to prepare Garuda for an initial public offering in 1998.

Garuda's current fleet of aircraft is comprised of three B-747-400s, six B-747-200s, eight B-737-300s, seven B-737-400s, 10 A-300-600s, nine A-300-B4s, six MD-11s, and five DC10s.

Soepandi said the amended order would strengthen Garuda's current fleet, which it planed to expand in the next few years.

"B-777s are suitable for Garuda's expansion plan as the jets are able to link Jakarta with Seattle or Denpasar with Honolulu nonstop."

The agreement, signed by Soepandi and Boeing Commercial Airplane group president Ron Woodard, reserves Garuda the option to acquire six B-747-400s.

Rolls Royce, Pratt and Whitney and General Electric produce the engines for the B-777. Garuda has not decided which company it will use.

A senior executive of General Electric, Bruce H. Charnley, told The Jakarta Post yesterday that the B-737 is powered by a CFM-56/3C engine produced by CFMI, a joint venture firm equally owned by General Electric and Snecma of France.

The B-747 can be powered by General Electric's CFG-80/C2.

"We have to compete with the other engine manufacturers in winning Garuda's and the Indonesian government's trust to use our engine," Charnley said.

Soepandi held meetings yesterday with General Electric and Rolls Royce executives.

When asked for the financial details of the new order, Soepandi replied: "We will lease the aircraft from a leasing company. A tender for lessor qualification will be completed at least two years before the first batch is delivered."

Last March, Garuda selected Deutsche Morgan Grenfell, a German leasing company, to arrange the lease of six Airbus A-330-300 aircraft. The six aircraft are the first of a batch of nine A-330-300s ordered by Garuda. The first of the A-330-300 aircraft, powered by Trent 700 Rolls-Royce engines, will be delivered in December.

Morgan beat Chase Manhattan and HSBC of Hong Kong in the bid to arrange the lease of the six A-330-300.

Separately at the show, Garuda signed an agreement with the state-owned aircraft assembler PT IPTN to procure up to 20 N-2130 jets. Garuda also plans to buy McDonnell Douglas MD-11 aircraft.

Meanwhile, IPTN president B.J. Habibie, who is also the minister for research and technology, signed agreements yesterday with executives of Hughes Electronics of the U.S. and Daimler- Benz Aerospace to develop a satellite-based navigation system.

The agreement, witnessed by President Soeharto, will develop a primary means of navigation for the civil aeronautic community and serve customers in Indonesia and the other parts of Southeast Asia.

The system, called Aeronautic Navigation Satellite System, will comply with International Civil Aviation Organization standards. It will provide navigation assistance for air, land and sea traffic.

Habibie, who celebrated his 60th birthday yesterday, refused to disclose the value of the project or its development schedule.

"We are not developing a 'monument', but we will produce money," was Habibie's only comment.

IPTN also signed an accord with South Korea to supply eight military versions of the CN-235 turboprop plane. The plane was developed jointly by IPTN and Casa of Spain.

The contract is based partly on a countertrade deal which requires Indonesia to buy South Korean military equipment worth up to 30 percent of the $120 million airplane contract. (icn)

Cathay Pacific -- Page 10

IPTN -- Page 11